I carry around 680 books on my reader at any one time. The only book in the main memory is the original Sony Manual, the rest are all on a 2GB SD card. I find that yes, it take a few minutes to index, however, I have no problem loading the books once they are indexed.
Most of my books are BBeB, with a few ePUB and a few PDF. The PDF are terrible. Haven't read one of the ePUB books yet.

One of my friends has several White Wolf manuals on her book reader in PDF - and when you get over several hundred books on the reader, opening one of the manuals will freeze and crash her reader. This problem only showed up last night, so I am not sure if she has found a resolution yet.

I have a lovely 8GB memory stick that is currently blank - anyone know if there is any difference between how the reader handles SD and how it handles MS?

Here's another thread you might find interesting since you're trying to put so many files on at once. It follows Sealbeater's oddysey to see how many books he could succesfully load. He got over 4000 after a lot of effort. Unfortunately, I don't think your 12k is do-able.

i came here specifically to find out about this problem: my PRS 505 worked ok until a week ago when i uploaded 4 or 5 pdfs to my approx 450 titles [mixed in internal memory and a 2Gb SD card]. now it hangs for about half an hour updating the database after i unplug the usb, and it drains the battery much faster.

i guess i'll try and delete the most likely culprits [pdfs] and see if the problem goes away. if not, i will give up on the SD card, and keep fewer titles only on internal memory.

One of my friends has several White Wolf manuals on her book reader in PDF - and when you get over several hundred books on the reader, opening one of the manuals will freeze and crash her reader. This problem only showed up last night, so I am not sure if she has found a resolution yet.

A solution was found.

Seeing as the White Wolf books, all in PDF format, were on my 4GB SDHC card along with everything else (ranging over 700 titles after the removal of those books--and indexing was clocked at 1 minute and 28 seconds--despite the majority of the titles being in PDF format), I tried putting them on my 1GB standard SD.

They load fine now, if a bit slow on the initial load of the book due to being graphics heavy. Once you get past the cover, though, it loads at about the same speed for most of the book, without any more crashes.